In the Sun Belt, which has been a bright spot in housing production the past few years, some states are falling behind, a new study finds.
In an era of strained housing affordability, new-home construction is one of the keys to easing the housing shortage. And some states are building faster than others.
South Carolina, Idaho, and North Carolina lead the nation in permitting new homes, according to data from the Lied Center for Real Estate at the University of Nevada, Las Vegas. On the other hand, the more affordable Midwest was stagnant. UNLV looked at data from the U.S. Census Bureau in the first eight months of this year compared to 2025.
Meanwhile, in the Sun Belt, which has been a bright spot in housing production the past few years, some states are falling behind, a new study finds. UNLV found slowing permitting activity in Texas, Arizona, Utah, and Oklahoma.
"The supply side will determine what housing or rent prices people will face in 18 to 24 months," study co-author Nicholas Irwin said. "And through political action, community members can encourage more development and put pressure on elected leaders to become accountable for rising housing prices."
New permits nationally fell in September—5.2% month over month and 7.4% year over year to an annualized 1.22 million units. Builders in some of these markets are relying on concessions to attract more buyers, but there's no question their confidence is shaken in such a difficult housing market.
For the first nine months of the year, overall new-home sales are 2.9% below where they were in 2025, Realtor.com® senior economist Joel Berner says.
Permits have been the "lone bright spot" in a lot of difficult data, Berner adds.
Housing affordability was top of mind in many swing states this year, and Democrats and Republicans both said they favor reforms that make it easier to build homes. State laws this year could lead to permitting of more homes, especially accessory dwelling units.
Building permits and affordability
UNLV based its study on permits per resident. In total, cities issued 968,187 housing permits nationwide, or abut 2.83 per 1,000 residents. That's essentially flat from the same time in 2025, but it's a 4.1% drop from the same time in 2023.
South Carolina topped the study, permitting 6.07 units per 1,000 residents, a 5% increase from where it was one year ago. Idaho followed at 6.4 units per 1,000 residents, and North Carolina came in third at 5.77 units per 1,000 residents.
Those three states also top a recent Realtor.com report on top new-construction markets.
"These states combine fast-growing economies with favorable new-construction environments to bring homebuyers a larger share of new builds on the market," Berner says.
While Florida, Texas, and Arizona are still in the top 10 states by number of permits, they've slowed the pace of permitting. Rhode Island, New York, and Massachusetts are near the bottom on number of permits, but they've seen notable jumps in how many homes they permit.
Idaho is seeing momentum in building new housing, including in Nampa. (Kyle Green/Bloomberg via Getty Images) Overall, 26 states and the District of Columbia permitted more homes compared to the same time in 2025. The other 24 states permitted less. The biggest drops came in Nevada, whose permit-to-resident ratio is down 29%, and Vermont and Connecticut, which both dropped 18%.
Nevada, which permitted 12,662 units in 2025 and 8,986 this year, joins North Dakota in permitting fewer homes than its projected household growth. That could spell trouble for affordability long-term.
About 64% of the permitted units are single-family, and 3.5% were 2- to 4-unit homes. The remaining 32% of homes are multifamily of 5 or more units.
Difficult market for homebuilders
Much of the housing data this year tells a story of a difficult market for homebuilders, with little relief in sight. This year, Mortgage Bankers Association Chief Economist Mike Fratantoni predicted mortgage rates would remain around 7.3% for the rest of the year and hover above 7% through 2027.
And National Association of Realtors® Chief Economist Lawrence Yun predicted the existing-home sales volume would rise just 4% from last year, having revised that downward this year.
Homebuilders are using incentives to entice buyers, and yet there are more existing homes on the market to compete with newly built ones. Berner explains that's true in the Midwest, often a center of affordability, where demand for homes is softer. Growing cost of land and labor is also making it harder for builders to compete for buyers.
But homebuilders still seeking permits for many units also says something. A permit doesn't mean a home starts construction immediately; it signals future intent.
"Builders are facing diminished buyer demand and high input costs, causing them to slow down when it comes to beginning and finishing projects. But permitting them has held relatively steady," Berner says. "We take this as a sign that builders expect conditions to turn around in the near future, and they want to be ready to capitalize when they do."
The UNLV study points to how affordability has worsened in many areas since 2018, and building new homes is key to improving it.
“Alleviating challenges related to the housing crisis really comes down to a city’s ability to actually build housing," Shawn McCoy, the report's other co-author said. "People need to be able to afford their home, but if they can’t find a home to rent or buy at all, there’s going to be a problem."